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Gov't ready to scrap Air India brand to attract investors

The Indian government is planning to open bids for a 100% stake in Air India (AI, Mumbai Int'l) and is ready to agree to scrap the flag carrier's brand to entice private investors, the Indian media have reported.

According to the Times News Network agency, the government will not set any preconditions regarding the brand name. During the previous, failed privatisation attempt in 2018 Delhi authorities sought to protect Air India's brand by requiring any potential bidders to keep the name for at least three years, and possibly longer.

By abolishing this criterium, the government would effectively pave the way for a potential merger of Air India with another airline.

The government is also planning to put all shares up for privatisation. During the previous attempt, only a 76% stake was available as the government insisted to retain a 24% stake itself.

According to the Press Trust of India, while formal bids will be invited in November 2019 through the official e-bidding system of the government, several private investors already expressed interest in a 100% stake in Air India.

Besides allowing for the end of Air India's brand name, the government is also trying to lull investors by reducing the carrier's debt. Around half of Air India's total debt of INR580 billion rupees (USD8.2 billion) was offloaded to special purpose vehicle Air India Asset Holding Ltd (AIAHL), which is now issuing bonds in tranches to repay this debt.

As the new privatisation attempt draws near, three state-owned fuel suppliers Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp decided to postpone calling in their debt from the carrier. On October 5, the three firms issued an ultimatum to Air India, demanding the repayment of all debts by October 18. Otherwise, they threatened to stop supplying fuel to the airline. However, they later said that despite the debt not being repaid, they will continue to supply fuel as Air India has renewed its promise to repay the debt according to a pre-agreed schedule.

Air India owes around INR50 billion (USD705 million) to these fuel suppliers.

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